Auto Slowdown Ind India:Dealers woo customers with cash benefits, lower interest rates

Four Years on, Bike Cos Drive in Discounts, Freebies

After a gap of more than four years, freebies are slowly entering the two-wheeler market. The dealers are wooing customers with cash benefits and lower interest rates to get some traction on sales. The two wheeler market is still going strong reporting doubledigit growth as sales grew 17% to 31.87 lakh units in April-June quarter, unlike cars where crawling sales has forced companies to dole out discounts running into lakhs of rupees to bring customers back to the dealerships. 

Few bikes are, however, facing heat from different manufacturers and have joined the discount bogey due to declining customer interest. 
Honda Motorcycle and Scooter India's (HMSI) premium 110cc bike, the CB Twister, priced at the exshowroom price of . 49,775 in Delhi now comes with some exciting discount of up to . 3,500 in select markets as dealers claim that sales on this model have been sluggish due to bigger competitors like Splendor that comes at a lower price of . 41,350 and is eating up into its sales. 
"We are offering some benefits to reduce our stocks as the market has been slowing with retail sales getting impacted and the cautious customers are postponing their purchase decisions," a central Delhi-based Honda dealer said. 
The two-wheeler market has not been much impacted by the rising fuel prices because the quantum of . 5 hike in petrol leads to a marginal increase in the running cost as fuel efficiency of most vehicles is very high. The market has been directly impacted by the surging interest rates which have shot to over 22-24% in the past one year, rising by around 4%."The interest rate for two-wheelers has risen more compared to cars as the risk is high though the total value of vehicle is much lower. There have been a few models where dealers are vying for customer's attention by discounting interest rates on few models," a top executive of HDFC Bank said. 
The benefits to customers are mainly coming from dealers as companies maintained they have not initiated any freebies yet, and said these could be marketing initiatives dealers are looking at to net higher sales. "The two wheeler market is still going strong and we do not see any reason to offer any benefits now," said Milind Bade, head of marketing at Bajaj Auto. However, the company's 100cc entry level bike Discover is coming at 0% rate of interest as dealers are offering interest subvention to improve retail sales. 
Analysts tracking the market said discounts from dealers are precursor to what the companies may offer in the next few months. "As the ticket size of two wheeler purchases is less, they are not immediately impacted by the macro economic sentiment. But if dealers are giving benefits to consumer, companies may not be far behind," said analyst with a Mumbaibased brokerage. 
The dealers of Chennai-based TVS Motors are luring customers with few insurance and road tax benefits in certain markets on their 110-cc Star City bike with deal benefits of up to . 1,500. Hero Honda, the market leader, has not changed its marketing strategy since 2006 when it stopped any kind of discounts and benefits on its entire product range. 
"There is no scope for any freebies as we are chasing huge demand for our bikes and scooters and there is hardly any inventory at the company or the dealer level," the Hero Honda spokesperson said. The company's sales grew 24% to 14.91 lakh units in the April to June quarter.